Bulgaria and Romania are both full members of the European Union. The reports
have been prepared in this post-Accession perspective and seek to assess the
progress made on the commitments made at the time of Accession. The reports are
not monitoring reports. They are an assessment made under the Cooperation and
Verification Mechanism established by the Commission decision of 13 December
2006.

Methodology for the reports

The reports have been drawn up from an array of information sources. The
Bulgarian and Romanian Government have been a primary source of information.
Information and analyses were also received from the EC Representation Office
and Member State diplomatic missions in Bulgaria and Romania, civil society
organisations, associations and expert reports. The Commission organised
missions to both countries during April 2007, under the Cooperation and
Verification Mechanism. They were supported by individual experts from Member
States and Commission services. The purpose was to seek independent assessment
of progress. The experts drew up reports which subsequently were transmitted to
the two Governments for correction of any factual inaccuracies.

Bulgaria and Romania submitted a first report on progress achieved under the
Cooperation and Verification Mechanism by 31 March 2007 and both have continued
to update the Commission on pertinent developments since then.

What is the cooperation and verification mechanism for the judiciary and
the fight against corruption?

The Commission established a mechanism to cooperate and verify progress
within the reform of the judiciary and in the fight against corruption and
organised crime after accession. This is based on the commitments made by both
countries at the time of accession. Under the mechanism, both Bulgaria and
Romania agreed to report regularly on progress in addressing specific
benchmarks. The first report was submitted by both countries by 31 March 2007.

The Commission has provided internal and external expertise to cooperate and
provide guidance in the reform process and to verify progress. The Commission
gave a commitment to report to the European Parliament and the Council by June
on the progress made by both countries in addressing the benchmarks. The
Commission's reports assess whether the benchmarks have been met, need to be
adjusted and may request further reports on progress if necessary. The mechanism
will continue until all the benchmarks have been met. The Cooperation and
Verification Mechanism is coordinated by the Secretariat General under the
authority of the President.

Should either country fail to address the benchmarks adequately, the
Commission will apply the safeguard measures of the Accession Treaty (see
above).

What are the benchmarks that the two countries have to meet?

A full list of the six benchmarks for Bulgaria and the four benchmarks for
Romania are provided in annex

What are the safeguard clauses?

Safeguard mechanisms of last resort which are triggered either to prevent or
to remedy particular problems or threats to the functioning of the Union. Any
measures taken should be proportional to the corresponding shortcomings.

The EU legal order, which applies to all Member States, provides many
safeguard measures in the various EU policies.

In addition to this, the Accession Treaty for Bulgaria and Romania
provides for further safety nets to address potential accession related
difficulties. The following three safeguards can be invoked up to 3 years after
accession:

a general economic safeguard clause; (Article 36)

a specific internal market safeguard clause; (Article 37)

a specific justice and home affairs safeguard clause, (Article
38)

These safeguards are the same as the ones included in the
Accession Treaty of the Member States who joined on 1 May 2004.

What is the general economic safeguard clause?

The general economic safeguard clause is a traditional trade policy measure.
It aims to deal with adjustment difficulties which an economic sector or area in
either old or new Member States may experience as a result of accession. Member
States (new and old) may apply, during a period of three years after accession,
for authorisation to take protective measures in order to remedy such economic
difficulties.The European Commission may then decide such measures. They
can be decided only after accession and shall not entail frontier controls.

What is the internal market safeguard clause?

If Bulgaria or Romania fails to implement internal market legislation with a
cross border effect and this risks a serious breach in the functioning of the
internal market, the European Commission may take safeguard measures. It may do
so either upon its own initiative or on the request of a Member State.

Such safeguard measures may be taken until 3 years after accession, but they
may be applicable beyond that date until the situation is remedied. The European
Commission may modify, shorten or terminate the measures in response to
progress. If necessary, the measures may be decided prior to accession and
become applicable upon accession.

The internal market safeguard clause covers the four freedoms and other
sectoral policies such as competition, energy, transport, telecommunication,
agriculture and consumer and health protection (e.g. food safety).

The Commission will decide upon the measures on a case-by-case basis. The
measures may limit the application of the internal market or cross-border EU
policy in the given sector only as much as necessary to remedy the situation.
Priority will be given to measures which least disturb the functioning of the
internal market and, where appropriate, to the application of the existing
safeguards in the EU laws and standards. The internal market safeguard measure
applies exclusively to Bulgaria and Romania and not to the other Member States.

What are transitional measures?

The Commission may, for three years after accession, prevent the export of
Bulgarian or Romanian products which do not comply with EU veterinary,
phytosanitary and food safety rules, to the rest of the EU.

To take a concrete example, the export of live pigs and pig meat products of
Romania and Bulgaria to the rest of the EU will remain banned as long as the
animal disease classical swine fever has not been eradicated. For instance, food
safety in Europe can be guaranteed by the possibility to prevent the sale of
unsafe products in the internal market. The Commission may add further food
establishments to the list of those banned for three years after accession from
exporting to the rest of the EU after accession. Those establishments which do
not comply with EU standards can only sell their products on the domestic
markets. By the end of this period, these establishments either have to be
upgraded or close down.

In addition, there are also transitional measures which have been agreed
during the accession negotiations, laid down in the Accession Treaty. They
concern specific areas where either Bulgaria and Romania or the current Member
States are allowed to not fully apply the EU laws and standards during a limited
period after accession. These areas cover for example the free movement of
workers, acquisition of land, road transport and some aspects of the
environmental and agricultural EU laws and standards.

What are financial corrections on EU funds?

Bulgaria and Romania will benefit from substantial EU funds, in particular
structural and agricultural funds. The Commission will ensure that these funds
are properly managed. Any improper use of EU funds will lead to financial
corrections. These may consist of delayed disbursements, reduction on future
payments or recovery of funds.

For structural funds, the EU laws and standards provide four types of
control that may lead to financial corrections. Firstly, every Member State
needs to submit operational programmes which have to be approved by the
Commission before any payments can be made. Secondly, if Bulgaria or Romania do
not have adequate management, certification and audit authorities, no interim
payments will be made. Thirdly, the disbursement of funds for the programmes can
be interrupted, suspended or cancelled if the Commission suspects or detects
cases of irregularities or fraud including corrupt practices. Finally,
financial corrections can take place in case irregularities are found during
the regular ex-post controls.

For agriculturalfunds, Member States are obliged to
have accredited and efficient paying agencies to ensure the sound management and
control of agricultural expenditure. Secondly, Member States are also required
to operate an integrated administrative and Control system (IACS), for the
direct payments to farmers and parts of rural development expenditures, in order
to avoid for example fraudulent practices and irregular payments. Thirdly, if
Member States fail to operate such control systems properly, the Commission
decides ex-post on financial corrections through the annual financial controls.
Finally, if the Commission concludes that the funds are not spent according to
the rules, the Commission may suspend or temporarily reduce the payment of
advances, on a case-by-case basis.

In addition to these mechanisms for agricultural funds applicable to any
Member State, the Commission has introduced specific rules for Bulgaria and
Romania to address the risk that their IACS will not function properly as from
accession. The funds covered by IACS present around 80% of the agricultural
funds and concern direct payments to farmers and rural development expenditure.

This additional mechanism gives the two countries time to complete the
necessary work on a properly functioning IACS. The Commission will closely
monitor the situation in 2007. In case of systemic problems with the management
of EU funds, the Commission will later in 2007 decide whether to withdraw
provisionally 25% of the payments covered by IACS. During the annual ex-post
controls, the Commission decides whether to maintain the reduction.

ANNEX

Benchmarks to be addressed by Romania:

1. Ensure a more transparent, and efficient judicial process notably by
enhancing the capacity and accountability of the Superior Council of Magistracy.
Report and monitor the impact of the new civil and penal procedures codes.

2. Establish, as foreseen, an integrity agency with responsibilities for
verifying assets, incompatibilities and potential conflicts of interest, and for
issuing mandatory decisions on the basis of which dissuasive sanctions can be
taken.

3. Building on progress already made, continue to conduct professional,
non-partisan investigations into allegations of high level corruption.

4 Take further measures to prevent and fight against corruption, in
particular within the local government.

Benchmarks to be addressed by Bulgaria:

1. Adopt constitutional amendments removing any ambiguity regarding the
independence and accountability of the judicial system.

2. Ensure a more transparent and efficient judicial process by adopting and
implementing a new judicial system act and the new civil procedure code. Report
on the impact of these new laws and of the penal and administrative procedure
code, notably on the pre-trial phase.

3. Continue the reform of the judiciary in order to enhance professionalism,
accountability and efficiency. Evaluate the impact of this reform and publish
the results annually.

4. Conduct and report on professional, non-partisan investigations into
allegations of high-level corruption. Report internal inspections of public
institutions and on the publication of assets of high-level officials.

5. Take further measures to prevent and fight corruption, in particular at
the borders and within local government.

6. Implement a strategy to fight organised crime, focussing on serious crime,
money laundering as well as on the systematic confiscation of assets of
criminals. Report on new and ongoing investigations, indictments and convictions
in these areas.